Import substitution a must, says govt

SANGAM PRASAIN

KATHMANDU, JUL 03 -

The government will take import substitute measures to protect the domestic industry in the areas of meat, vegetables and fruits, cements and dairy. With the trade deficit as high as 52 percent and Balance of Payment deficit at Rs. 17.36 billion, the government is seeking to reduce imports.

Finance Secretary Rameshwor Khanal on Saturday said the measure would substitute imports worth Rs. 25-30 billion. Nepal imports 55,000 tonnes meat annually while import of other agro products is high and which has triggered BOP deficit to some extent.

“We have low competitive edge products compared to neighboring countries. In this situation, substituting import of these products will be viable as we cannot think of exporting products that reduce the ballooning trade gap immediately,” he said.

He said that the government would also take some tough measures on petroleum products (PoL) and hike electricity tariff in the upcoming budget. “We have to take these measures keeping in mind the increasing demand for PoL products as the government will not be able to subsidize the products that account for the huge BOP trade,” Khanal said at a pre-budget discussion organised by Society for Economic Journalists of Nepal (SEJON).

The government will also be harsh on electricity tariff. If the same tariff remains, the Nepal Electricity Authority (NEA), which is reeling under a huge loss, could go bankrupt. “This will affect people for a short time but will be beneficial and sustainable,” he said.

The upcoming budget has also adopted measures to substitute some import based industrial and agro products by prioritising their production and encouraging them in the home country. Among the industrial products, import of cement and dairy products would be substituted by domestic production. Secretary Khanal said that by mid-January there will be an additional 12,000 tonnes cement production in the country, which will help substitute import of cement.

“If one more big dairy processing industry is established, it will help import substitution,” Khanal said adding that the government was committed to provide all facilities regarding roads and electricity in those industries.

The government is planning to bring the advance budget by the next week. “A full-fledged budget will be announced by the national consensus government,” said Khanal quoting the Prime Minister who resigned recently.

Khanal said the development budget will take a slow growth path due to lack of political commitment. Delay in budget will not hamper the monetary policy and other issues related to it, but it will severely impact the development budget.

Garment exports sink to zero

 

 SANGAM PRASAIN

KATHMANDU, JUL 05 -

Long plunging garment exports to the US have hit rock bottom with not one piece being shipped in June. Nepal's readymade garment manufacturers received zero orders from the US during the month.

Statistics of the Garment Association of Nepal (GAN) show that garment exports in the first six months of 2010 recorded a decline of 38.9 percent. According to GAN, exports to the US amounted to US$ 2.19 million during the review period. Exports during the first six months of 2009 were worth US$ 3.59 million.

Exports to the US have been consistently declining since the elimination of quotas in global apparel trading in 2005. The decline in exports to the US in the last four years has pushed Nepal's garment industry to the verge of collapse.

Even though exports to the US had grown by around 25 percent in January 2010, the last five months have been dismal. According to GAN, exports have nosedived by 90 percent during the period 2005 to 2009.

Garment manufacturers are not surprised by this massive decline. "This is not a new story for the garment industry," said GAN past president Kiran Sakha. "Manufacturers and exporters both have lost hope due to the constant labour unrest and bandas that have crippled production."

"This was bound to happen," said trade expert Ratnakar Adhikari. He added that Nepali readymade garments had been losing competitiveness in the US market. "Garment manufacturers and exporters should look to other markets including the EU rather than relying on the US market only," said Adhikari.

With Nepal not being able to get duty-free access for its readymade garments in the US market, the only hope is the Trade and Investment Framework Agreement (TIFA) which Nepal and the US are to sign in the near future. TIFA has provisions that will help Nepal to gain favourable market access in the US.

Team hails itself for scaling Yala Peak

SANGAM PRASAIN

KATHMANDU, JUL 07 - A team of civil servant mountaineers are raring to have a crack at the world's highest peak after scaling the 5,550-m Yala Peak in Langtang as a warm-up exercise.

 

The 20-member group of mountain climbing bureaucrats plan to make an attempt on Everest during the next spring season. Speaking at a press conference on Tuesday, the expedition members said that the objective of their mission was to gather information based on facts and to keep themselves abreast of the impacts of climate change on the Himalaya.
The team also wants to help make Nepal Tourism Year 2011 a success through the participation of civil servants, said Lilamani Poudel, secretary at the Office of the Prime Minister.
“The Everest expedition by civil servants will help to boost their morale besides helping to gather information regarding mountain tourism,” said Kishore Thapa, secretary at the Ministry of Tourism and Civil Aviation.
The adventurous officials underwent extensive training at the Mountaineering Training Foundation last week under the guidance of seasoned climbers.
The government has allocated Rs. 3 million for the warm-up climb and Rs. 30 million for the Everest expedition.
Ang Tshering Sherpa, immediate past president of the Nepal Mountaineering Association (NMA), said that the country had tremendous potential in mountaineering tourism, and that the Everest expedition would enlighten the government officials on the kind of programmes and policies needed to boost the sector.
Pemba Gyalzen Sherpa, chief instructor to the expedition, said that the performance of the civil servants on Yala Peak had been more encouraging than he had expected.
“I had estimated that 60 percent of the team would be able to get to the top, but everybody made it,” he said. He added that Everest would be much tougher and that success would be determined by weather conditions.

Petrol, diesel dearer, LPG spared

SANGAM PRASAIN

KATHMANDU, JUL 07 - Nepal Oil Corporation (NOC) has revised oil prices effective from Tuesday. The state-owned monopoly has increased the price of petrol by Rs. 3 per litre and diesel and kerosene by Rs. 2.50 per litre citing mounting losses due to poor supply. 
Petrol now costs Rs. 85 per litre and diesel and kerosene both Rs. 65.50 per litre. Prices are lower by Rs. 1.50 per litre in the Tarai. With the hiked rates, NOC will make a monthly profit of Rs. 79.9 million, said deputy managing director Bachhu Kumar Kafle.
He added that NOC makes a profit of Rs. 5 per litre on petrol, Rs. 0.76 on diesel, Rs. 8 on kerosene and Rs. 16 on aviation fuel. However, NOC still incurs a loss of Rs. 130 on a cylinder of LPG, Kafle said. NOC said it would not hike the price of LPG immediately. “The government has provided Rs. 800 million to adjust the price of LPG, and increased profits on gasoline will help offset the losses incurred in cooking gas,” said Purushottam Ojha, secretary at the Ministry of Supplies.
NOC said its losses in the current fiscal had reached Rs. 1.16 billion. The company also has outstanding loans of Rs. 10.74 billion.
With the country crippled by a petroleum shortage for more than a week, NOC hiked the prices saying that the deficit had been caused by India Oil Corporation’s (IOC) move to cut deliveries by 50-60 percent as NOC had fallen behind in its payments.
Kafle said they revised the prices in line with the recent hike made by IOC. The Indian supplier had revised its prices on July 1 resulting in monthly losses of Rs. 100 million to NOC. He added that it had become necessary to raise the rates as fuel was cheaper in Nepal and this was encouraging smuggling to India. “This revision has not been induced by international prices. We have been forced to hike the rates as we were short of cash to import fuel,” Kafle said.
According to NOC, it imported 957,711.91 kl of petroleum products in the first 11 months of the current fiscal including 553,117 kl and 147,189 kl of diesel and petrol respectively, 128,296 tons of LPG and 76,008 kl of aviation fuel.

Revised Rates

Year           Petrol        Diesel       Kerosene
                    (Rs/Lt)      (Rs/Lt)         (Rs/Lt)
2003               56             33.50          27
2004               62             41               36
2005               67             46               39
2006               67             52.50          47.65
2007-Oct       73.50         56.25          51.20
2007-Dec       80              56.25          51.20
2008              100             70               65
2008-Dec      85.50         60.50          60.50
2009              77.50          57.50          57.50
2010-Feb      77.50           59               59
2010-Mar      80                61               61
2010-Apr       82               63                63
2010-July       85               65.50           65.50

Source: NOC